1. Introduction

1INTRODUCTION

General observations The reform prospects, as well as institutional dialogue between local and central public administrations in Moldova, are currently experiencing strong impact from the COVID-19 pandemic crisis. For the time being, it is rather difficult to comprehend the overall influence of the crisis since the crisis is ongoing. From preliminary estimates, the COVID-19 pandemic influence will be drastic upon both local and the national government finance. And not yet clear at all, is its influence upon the international funding incoming in Moldova. From one side, the crisis has shown a significant change in governmental priorities towards emergency issues, health care and national finance. From the other side, local governments being at the forefront of the crisis response, faced a bulk of additional competencies and experienced crucial downsizing of local budgets. Thus, many urgent reforms and improvements are required. The overall problems in local governance in Moldova are everywhere. In addition to the important strategic issues such as fiscal decentralisation, legislation and local economic development, there are also many other technical and seemingly less important issues which, at the end, create lots of problems and inefficiencies in local public administration. The accumulated poor attention to local governance, backlog of problems and challenges during the last 25 years, requires urgent solutions, in particular in the aftermath of the pandemic crisis when all types of resources will be much scarcer than before. Administrative-territorial division In Moldova there is a two-tier system of local governance. 898 administrative-territorial units of the 1st level: villages, communes, towns and municipalities – are called Local Governments of the 1st tier. The Moldovan system of local government includes 32 raions which are administrative-territorial units of the 2nd tier of Local Government, including Chisinau municipality, the capital city. Apart from those there is the autonomous region of Gagauzia with a special status and rather diverse sources of funding compared with all the other local authorities in the country. Gagauzia is having several particularities in administrative-territorial structure. For example, it embraces three raions, which do not have attributes of local governments (no elected representation), but which rather represent administrative sub-divisions of the administration of Gagauzian autonomy. There is also a separate administrativeterritorial unit Transnistria, which though formally and according to international law is considered Moldovan territory, in fact represents a separatist region, uncontrolled by official Moldovan authorities in the aftermath of the military conflict of 19921993. On the current territory of Transnistria, there are administrative Soviet style authorities, unelected and which therefore can only be formally called local authorities. In general, they lack any decision-making or financial autonomy. The status of these regions is yet to be regulated. Political structure of Moldovan local governance

At the first tier of local governance there are executive and representative bodies of local authorities. Local governments of the first tier are led by the Mayors who are directly elected directly by all people. The mayor and his office represent the executive body within the local authority. The local council is the representative decision-making body that approves local regulations and which has quite broad competencies, including overall supervision of the mayor’s office activities. Local councils are elected directly by the people based on political parties’ lists, but usually there are also many independent candidates and local councillors as well. Local governments of the second tier are led by raional councils (32 in total), universally elected by all people. Raional councils

afterwards elect among their members the Presidents of raions. The president of the raional council leads the executive branch of the local government of the 2nd tier, which is called apparatus of the President of raional council. It is worth noticing a growing number of independent mayors and members of local councils as well as a growing number of women mayors. In Gagauzia, at the regional level, executive authority is being represented by the Governor (Baskan) elected directly by all people, while the representative power belongs to the Popular Assembly. Concerning the LGs of the first tier, the system in Gagauzia is identical to the rest of the country. Competencies In Moldova, the competencies of LGs are both distributed between the different tiers of local governments and divided into own competencies of the LGs and competencies delegated by the central government. Like in many European countries, the two ties of Moldovan local authorities have a standard set of competencies. LGs of the first tier are responsible for the following domains: water supply, waste management, kindergartens, street lightening, local transport, local roads, culture, territorial arrangement, economic development, urban planning, school buildings, local/regional roads, local economic development and local parks. More variable competencies of local authorities are rarely in purview of the local governments of the first tier. Local governments of the second tier have almost the same competences as those of the local governments of the first tier but adjusted to their territorial scale. For example, they also have competence in the fields of roads, parks, local economic development - only on a larger territorial scale than the raion. Additional competencies of LGs of the second tier are limited to certain areas such as social protection, where they are responsible for certain tasks. Main sources of LGs revenues LGs in Moldova have the following sources of revenues: 1. Own revenues - real estate tax, land tax, local taxes, fees and charges. LGs of the 2nd tier benefit from the natural resources tax, which is quite an important source of local revenues; 2. Shares from the personal income tax: • for the budgets of villages (communes) and cities (municipalities), except for raion-residence cities (raion-residence municipalities) - 100% of the total volume collected on the territory of the respective administrative-territorial unit; • for the budgets of the cities-residence of raions - 50% of the total volume collected on the territory of the respective administrative-territorial unit; • for the budgets of the municipalities - 55% of the total volume collected on the territory of the respective administrativeterritorial unit; • for the budgets of raions – 25% of the total volume collected on the territory of the respective administrative-territorial unit 3. Fees and other payments 4. Transfers from equalisation fund and transfers with special destination. 5. Grants from external sources

Box no. 1: Levels of government and administrative organisation in Moldova

Raions